COVID19 Update: 3rd April 2020 Changes have been made to Coronavirus Business Interruption Loan Scheme to benefit more businesses
The emergency loan scheme announced by the chancellor during the budget (CBILS) has been revamped following strong criticism that banks were taking advantage of the COVID19 crisis.
The Treasury said it had received more than 130,000 loan enquires from firms but fewer than 1,000 had been approved. The changes made to the scheme have made it easier for firms to access the loans.
The amendments to the business interruption loan scheme will mean more businesses are able to access financial support during the COVID19 lockdown. Previously, government-backed loans for small businesses were only available to firms that had previously been turned down for a commercial loan from their bank. Some of these commercial loans were requesting businesses pay interest rates of as much as 30%.
Following the changes to the scheme, applications will not be limited to businesses that have been refused a loan on commercial terms.
Interest rates charged to firms for loans are also expected to be kept as low as possible – given that the Bank of England’s base rate is at a record low of 0.1% and that the state is guaranteeing them. However there will not be a cap on the rates banks can charge. The issue is among those to be discussed when the chancellor holds talks with bank chief executives next week.
Support for big businesses
Larger firms with a turnover of up to £500m will also be eligible for more help.
The revamped scheme will offer government-backed loans of up to £25m to firms with revenues of between £45m and £500m.
Banks will also be banned from asking company owners to guarantee loans with their own savings or property when borrowing up to £250,000 and making operational changes to speed up lending approvals.
Government to fund first 12 months of interest and fees
The government will continue to cover the first twelve months of interest and fees.
We have attached some websites/ helpful articles below on the matter:
We have published other key points to note for businesses and self-employed during the COVID19 Crisis: please click here to view.
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The information contained above is for general guidance purposes only. Whilst every effort has been made to ensure the contents are accurate, please note that each individual has different circumstances and it is essential that you seek appropriate professional advice before you act on any of the information contained herein. HB Accountants can accept no liability for any errors or omission or for any person acting on or refraining from acting on the information provided in the above